Amazon Has Been Lagging the S&P 500 in 2026. This Is the Only Reason I'd Need to Buy the Stock in August Without Hesitation.

Amazon trades at a price-to-earnings ratio of 21, its lowest valuation in more than a decade, even as the stock trails the S&P 500 in 2026. The company is deploying $220 billion in AI capital expenditures, a bet that drove second-quarter results: AWS revenue climbed 37% year-over-year, while net income surged 243%. AMZN carries a $496 billion contract backlog, and 97% of Wall Street analysts rate the stock a buy, implying 27% upside from current levels.

The valuation compression creates a setup: AMZN now trades at its cheapest multiple since before 2014, while the cloud and AI infrastructure spending cycle accelerates. The Q2 earnings beat and the AWS growth rate validate the capex strategy, yet the stock has underperformed the broader index year-to-date, widening the discount.